Question

1) What is the change in productivity if inputs decrease by 6% and outputs decrease by 20% ?

A. -79%

B. 79%

C. 21%

D. -21%

2) A linear regression model that predicts sales is given as: Sales=150-5x(Price). which of the following can be said based on this model?

A. Setting the price at $10 will generate 50 units of sales.

B. To increase sales by 5 units, price should be reduced by $5

C. To increase sales by 1 units, price should be increased by $145

D. To increase sales by 5 units, price should be reduced by $1

Answer 1

Solution:

1: 14.89% change

Hence,

Hence, change in productivity is,

2: Option D

With a drop in price of one dollar there will be an increase in the sales by 5 units because the coefficient of variable price is 5 and hence the change in in unit of price changes the sales by 5 units.